Treatment of pre operative expenses

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 December 2012 Sir,
What is the treatment of Pre- opererative expenses like salary, bank charges, R & M(other), travelling etc.
Does they b capitalize or amortize? (if these expenses are done before the commencement of production..)
then where does it should be shown in revised
balance sheet?

Arun Biyani

Arun Biyani (Expert)
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19 December 2012 Please refer AS 10, they all have to be capitalized, if assets has not come into existence then they should be shown as CWIP along with fixed asset.

Querist : Anonymous

Querist : Anonymous (Querist)

19 December 2012 Sir,
these expenses are of revenue nature..bt as operation has not started yet these are to b capitalize..
bt they do not form part of fixed asset as AS-10 does not apply hear neither AS-26 apply hear.
I now that as per revised balance sheet they will form part of Other Non Current Asset on Asset side/
But my query is how to amortize them..?
or does they be amortize over the period of 5 year subseqently as provided in Sec35 D of Income tax act.

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